WIUM Tristates Public Radio

Farm Equipment Enters "Sharing Economy"

Jan 27, 2016

The time is ripe for the sharing economy in farm country.  Much like other Web-based companies such as Airbnb or Uber, a site dedicated to leasing and using farm equipment is making available expensive machinery during the times producers need it most. And the idea is taking root as crop and livestock prices trend lower and costs climb higher.

“You get innovative when things get tighter,” said Chad Hart, an agriculture economist at Iowa State University. “We're looking for ways to enhance income right now especially in a low margin environment.”

After land, equipment is typically the biggest expense for Midwestern crop farmers. When times are good, people buy new, bigger or fancier tractors and combines. In a down economy, new investments can be out of reach, but the need for the right equipment at the right time remains.

“We're buying very expensive equipment, you know $300,000 to $400,000 purchase price,” said Boyd Brodie, the operations lead at Key Cooperative in Roland, Iowa. “(With) our seasonal nature as a business, when we're growing crops, we can a lot of times only operate that equipment for weeks or maybe a month or more.”

What’s more, Brodie said, during that limited time Key Cooperative may have more interested users than it has equipment to lend.

This Case IH floater can spread fertilizer without compacting soil. Key Cooperative in Roland, Iowa has offered it up for others to use via a sharing site, MachineryLink.com
Credit Amy Mayer/Harvest Public Media

Last fall, Brodie decided to list some of Key’s equipment on MachineryLink.com, a sharing website that hopes to connect idle equipment with farmers who need it. In addition to putting some of Key’s machines to work, Brodie said, it could help the coop bring in extra equipment during busy times.

“This sharing opportunity is one way that I think we can reduce our costs, be more efficient and actually try to get to a break-even or some level of profit,” Brodie said.

Modern farmers rely on big-ticket machinery exactly, and really only, when they need it. Neighbors probably need harvesters at the same time. But an online platform expands the pool of available equipment and can match up users farther afield. It’s kind of like a regional dating site.

Machinery Link’s Jeff Dema said the company has borrowed from various Silicon Valley success stories. It uses community rules and a rating system, for example, to hold people accountable.

Still, farmers have some unique concerns about sending half-million dollar pieces of equipment hundreds of miles away from home.

“They want to make sure their equipment is going to be taken care of,” Dema said. “And we know farmers really well, so we built a model and a platform that kind of accommodates those concerns.”

Machinery Link’s parent company operated a combine leasing business, which Dema said helped it learn the ins and outs of the business, like insurance, repairs and transportation. That the company is familiar with those concerns, Dema said, helps put farmers at ease.

“You get innovative when things get tighter,” said Chad Hart, agriculture economist at Iowa State University.
Credit Amy Mayer/Harvest Public Media

In a best-case scenario, Dema expects an owner could more than double the time a given piece of equipment gets used. A combine, for instance, could start harvesting in Texas in May and travel north with the season. The owners would earn rental income all the while, except when they’re using it themselves.

But there’s an additional reason this type of short-term rental system could be good for farmers.

“It is a great way to test something a little bit before you actually jump in and use it,” said Mark Hanna, an agricultural engineer at Iowa State University. He says that a new thing might be the latest piece of technology, but it could also be a different farming practice.

He offered strip tillage as an example. It’s an alternative to tilling an entire field that can help prevent erosion and nutrient run-off. But switching to it is not an easy proposition.

“You need a certain piece of equipment, maybe, to do that,” Hanna said, “but how does (strip tillage) interplay with my fertility, my pest management, that type of thing. So you can see this in practice before you make the big jump in terms of equipment investment.”

And a farmer may discover he can implement the new practice without ever having to make that investment, Hanna said, if he can simply match up with one someone else already bought and doesn’t need at the same time.